Big Oil is holding back on us.

If only our oil companies had somewhere to drill in the US, we could lessen our demand for foreign oil.

Oh wait they do...

http://resourcescommittee.house.gov/images/stories/Documents/truth_about_americas_energy.pdf

Some highlights -

In the last four years, the Bureau of Land Management has issued 28,776 permits to drill on public land; yet, in that same time, 18,954 wells were actually drilled. That means that companies have stockpiled nearly 10,000 extra permits to drill that they are not using to increase domestic production. Further, despite the federal government's willingness to make public lands and waters available to energy developers, of the 47.5 million acres of on-shore federal lands that are currently being leased by oil and gas companies, only about 13 million acres are actually in production, or producing oil and gas. Similar trends are evident offshore as well, where only 10.5 million of the 44 million leased acres are currently producing oil or gas.

Combined, oil and gas companies hold leases to nearly 68 million acres of federal land and waters that they are not producing oil and gas. Oil and gas companies would not buy leases to this land without believing oil and gas can be produced there, yet these same companies are not producing oil or gas from these areas already under their control.

If we extrapolate from today's production rates on federal land and waters, we can estimate that the 68 million acres of leased but currently inactive federal land and waters could produce an additional 4.8 million barrels of oil and 44.7 billion cubic feet of natural gas each day. That would nearly double total U.S. oil production, and increase natural gas production by 75%. It would also cut U.S. oil imports by more than a third, and be more than six times the estimated peak production from the Arctic National Wildlife Refuge (ANWR).

Why wouldn't the oil companies drill for more oil if they could?  Oh yea, because they are each make around 2-3 million dollars per minute.  Big Oil isn't looking out for America, it's looking out for itself. 

Looks like Democrats may be doing something about it:
http://resourcescommittee.house.gov/index.php?option=com_content&task=view&id=389&Itemid=1

Washington, D.C. - In an effort to compel oil and gas companies to produce on the 68 million acres of federal lands, both onshore and offshore, that are leased but sitting idle, House Natural Resources Committee Chairman Nick J. Rahall (D-WV) today introduced legislation that gives Big Oil one option - either "use it or lose it."

"Big Oil, as many Americans already suspect, are perfectly fine with high gasoline prices at the pump while they hold back domestic production on federal leases and enjoy world record profits.  I am calling them on the carpet. I am calling their bluff.  We are not going to continue to allow them to speculate and profiteer with public resources to the detriment of the American people," Rahall said.

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So this offshore drilling scam is really just an attempt to grab as much public land as possible before Big Oil's buddies Bush/Cheney leave office? Or is it just a political ploy by Bush, since all he has to do is overturn an executive order and bypass Congress. Hmmmm....

Pink Slip

What you are talking about is called 'Collusion' and is illegal.

http://en.wikipedia.org/wiki/Collusion
"In the study of economics and market competition, collusion takes place within an industry when rival companies cooperate for their mutual benefit. Collusion most often takes place within the market form of oligopoly, where the decision of a few firms to collude can significantly impact the market as a whole. Cartels are a special case of explicit collusion. Collusion which is not overt, on the other hand, is known as tacit collusion."

SO when is the lawsuit? When will the Democratic controlled Congress quit having these dog and pony show "hearings" and actually do something? Like the way Congress saved America from the AT&T monopoly? Or when Congress saved us from high cable TV prices? Or when we stupid American Consumers needed a law requiring seat belt use?

Don't blame me,
I didn't vote for a
socialist.

How is it collusion, if they've decided individually that's it not profitable enough to drill for more oil?

As far as lawsuits, I believe we could sue OPEC through a provision in the WTO for restraint of trade. But I doubt either party has the political will to stand up to the mighty Saudis.

Pink Slip

Your statement: "How is it collusion, if they've decided individually that's it not profitable enough to drill for more oil?"

The answers:
First, with oil at an all-time record and historic high, how can it not be "profitable enough to drill for more oil?" The Saudis and OPEC seem to be making a killing right now.
Second, what you stated about a company individually making a decision is called "Tacit Collusion" and is still illegal. A company does not need to communicate it's intentions to be guilty of Tacit Collusion.

See United States Court of Appeals For the Seventh Circuit
No. 96-2058
PADDOCK PUBLICATIONS, INC., doing business as The Daily Herald,
Plaintiff-Appellant,
v.
CHICAGO TRIBUNE COMPANY, et al.,

http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=search&case=/data...

http://en.wikipedia.org/wiki/Tacit_collusion
"Tacit collusion occurs when cartels are illegal or overt collusion is absent. Put another way, two firms agree to play a certain strategy without explicitly saying so. This is also known as price leadership, as firms may stay within the law but still tacitly collude by monitoring each other's prices and keeping them the same. Usually, this occurs when a firm emerges to set the general industry price and other firms follow suit. oligopolists usually try not to engage in price cutting, excessive advertising or other forms of competition. Thus, there may be unwritten rules of collusive behavior such as price leadership (tacit collusion). A price leader will then emerge and sets the general industry price, with other firms following suit. For example see the case of British Salt Vs Salt Union (Competition Commission report which concludes price leadership and a lasting collusive agreement between the two firms)."

Answer to your point number 2: " I believe we could sue OPEC through a provision in the WTO for restraint of trade."

Logically, if we drilled for American oil on American land by American companies doing business in America, OPEC would be neutered. In fact, with enough oil reserves tapped into by American companies, the OPEC cartel could be driven out of business.

Don't blame me,
I didn't vote for a
socialist.

First, with oil at an all-time record and historic high, how can it not be "profitable enough to drill for more oil?" The Saudis and OPEC seem to be making a killing right now.

When demand is high and supply is low, prices go up. If supply were to shoot up, prices would drop. Since our demand for oil is inelastic, our consumption remains the same. So profits would drop. Here's a couple of quotes that back this up:

"More significantly, producers delayed expanding refinery capacity in the 1990s because the return on investment was so low. "Profit margins in 1998 and 1999 were terrible, so discretionary capital for refineries was minimal," says Gene Edwards, senior vice president of Valero, the nation's largest independent refiner" link

"Refiners and analysts also point to low profitability – not to NSR or other environmental requirements – when explaining why companies are not investing in new refineries. For example, Exxon Mobil’s chairman and chief executive recently stated that no oil company is prepared to build a new refinery because they cannot make money from doing so" Senate testimony

Is there another answer as to why the oil companies are not drilling on land they already have the leases for?

Pink Slip

Is there another answer as to why the oil companies are not drilling on land they already have the leases for?

Maybe there is no oil in the leased land.

If man has no tea in him, he is incapable of understanding truth. ~Japanese Proverb

Maybe there is no oil in the leased land

Then why don't they give it back?

Pink Slip

damn...your post beat me by 1 minute...

Then why lease it? Why spend money on it. If they want to lease a bunch of land that has no oil they can lease my back yard real cheap.

Why isn't it profitable to open new deep water oil wells in the Gulf?
Because the US Materials Management office has built in charges in their leases to oil companies. "GOMESA authorizes that 37.5 percent of all revenue including bonus bids, rentals and production royalty will be shared among the four States and their subdivisions."
http://www.gomr.mms.gov/homepg/whatsnew/newsreal/2008/080527.pdf

Also, the EPA is taking their cut:
https://www.loga.la/AM/Template.cfm?Section=Alerts1&Template=/CM/Content...

Once the government takes their cut for doing absolutely nothing, the potential profits of deep water drilling are gone.

So what is the incentive for drilling? Since the incentive has been taken away by government, why would oil companies bother spending that money?

The options I see are:
1) remove all restrictions on all drilling. I.E. Call the oil companies bluff.
2) charge the oil companies for the oil that is known to be available in leased land. Make it un-profitable to NOT drill.

Don't blame me,
I didn't vote for a
socialist.

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